Middle East peace process resumes for first time in three years, with US pushing for compromise

Israel and Palestinian negotiators have resumed direct peace talks for the first time in three years, with the United States urging both parties to compromise to reach a deal.

Chief Israeli negotiator Tzipi Livni sat next to her Palestinian counterpart Saeb Erkat in Washington and shared a traditional Muslim iftar meal to mark the break of Ramadan fasting.

US secretary of state John Kerry described the moment as "very, very special" and joked that "there's not very much to talk about at all".

Senator Kerry was flanked by seasoned Sydney-born US diplomat Martin Indyk, who has been named as the US's special envoy to the talks, and by White House Middle East advisor Phil Gordon.

US president Barack Obama welcomed the start of negotiations, warning of "hard choices ahead" but saying the talks were a "promising step forward".

"The most difficult work of these negotiations is ahead, and I am hopeful that both the Israelis and Palestinians will approach these talks in good faith," he said

Mr Obama promised the US would support both sides "with the goal of achieving two states, living side by side in peace and security".

Senator Kerry said compromise was a "keystone" in the effort to reach a solution.

"Many difficult choices lie ahead for the negotiators and for the leaders as we seek reasonable compromises on tough, complicated, emotional and symbolic issues," he said.

The two sides have agreed to continue talking for at least nine months, a US state department official said.

"We're going to make every effort to reach an agreement within that time frame, but... if we're making progress and we're continuing to make progress, this is not a deadline," spokeswoman Jen Psaki said.

Sydney-raised diplomat describes talks as 'humbling challenge'

Mr Indyk, 62, who has twice served as US ambassador to Israel and participated in the failed Camp David summit in 2000 under then president Bill Clinton, said he was taking on "a daunting and humbling" challenge.

"It has been my conviction for 40 years that peace is possible," he said.

The last direct talks collapsed in September 2010 amid continued Israeli settlement building.

These include the fate of Jerusalem, claimed by both as a capital, the right of return for Palestinian refugees, the borders of a future Palestinian state and the fate of dozens of Jewish settlements scattered across the occupied West Bank.

Earlier this month, on his sixth trip to the region in six months of dogged diplomacy, Senator Kerry wrested an accord setting out the basis for new negotiations from both sides."The meeting is to define what will come next in the negotiations," senior Palestinian official Hanan Ashrawi said.

"There must be a timeline and commitment from both sides on what they'll agree about. We hope for something good."

As a first step, Israel said at the weekend it would release 104 Palestinians imprisoned before the 1993 Oslo accords - some of whom are said to have been involved in attacks on Israelis.

The move has been welcomed by both Palestinian and US officials.

"We consider this an important step and hope to be able to seize the opportunity provided by the American administration's efforts," Mr Erkat said.

Meanwhile, Israeli president Shimon Peres, who is on a visit to Latvia, has hailed the resumption of peace talks.

"We want to establish a two-state solution of a Palestinian state beside the state of Israel, living in peace and friendship and bringing an end to all conflict, which is so necessary today for all the people in the Middle East," he said.